If you owe more than your Orange County, California house is worth and can’t afford your payments, you might be able to sell it for less than you owe — without having to pay the lender the difference. If you can no longer make your mortgage payments and your home is upside down, a foreclosure may not be your only option. A Short Sale is a sale of a home in which the market price is less than what is still owed on the home. It is a procedure sometimes agreed to by banks and mortgage lenders who often prefer to take a small loss, rather than going through a lengthy and costly foreclosure process. If you have been considering a short sale, or if you have been looking for help with one, you have come to the right place!. To assist you, you will need an experienced real estate team of short sale experts, including a licensed Realtor and professional negotiator. To help with a short sale or if you are facing foreclosure, continue reading to see how I can be of assistance!

If you are losing your home due to income or job loss, divorce, or other cause and you are either facing foreclosure or considering a short sale, what are your options?

Refinance – If you qualify, one of your best options may be a Home Affordable Refinance. You can read more about it here: MakingHomeAffordable.gov

Lender workout – Ask your lender to spread out the back payments and fees over a fixed number of upcoming payments, or ask for a loan modification, where they will forgive back payments or recast the loan into a new one with a fixed rate (Note: See waning on loan modification scams above. Do not pay a third party to do a loan mod for you – Work only with your existing lender).

Sell and bring cash to closing – This one is difficult for most people because it involves cashing out an IRA, 401K, or savings account to pay off back fees and the loan balance, but it may be a solution for some people.

Deed in Lieu (of foreclosure) – In this scenario, the homeowner trades the deed to the lender in exchange for a guarantee that the lender will cancel the note and forgive the debt.

Short sale – You sell your home for less than the amount owed, in cooperation with the lender(s) who forgive the debt.

For all of the options above, I would always advise you to consult with an attorney, tax advisor, or financial advisor. Real Estate agents (like myself) are not qualified to offer advice on tax, financial, or legal matters.

A Short sale may be a win-win

The seller gets out of the mortgage liability without facing bankruptcy.

The buyer gets the home at a reduced price.

The lender agrees to a loss it considers minimal without going through a foreclosure and being saddled with an un-salable property.

For the seller, there is less credit damage and you may be able to qualify for a home loan sooner than if you foreclosed on the property.

While it may seem surprising that lenders would agree to accept less than what they are owed, they benefit by not having to go through the process of foreclosing on the borrower and then having to put the property on the market. A market saturated with foreclosures can cost lenders billions — and as much as $50,000 or more, per foreclosure

Why do a short sale?

There are many reasons why home owners will consider doing one. If you purchased a home at the top of the market or with an ARM (Adjustable Rate Mortgage) or zero down loan, the mortgage payments, association dues, property taxes, and insurance payments may no longer be affordable for you. In some cases it may be better to cut your losses by selling the home and saving those payments instead. If you have been saying ” I need to do a short sale of my Orange County home” or ” I am considering a short sale” it may be for some of the reasons below

The home has an adjustable rate mortgage with payments that are no longer affordable

Income loss due to job layoff, illness, etc

Divorce

Loan modifications did not produce the desired results

To avoid a full foreclosure which may be far more harmful to your credit

Renting or leasing a home after a short sale

You’ve successfully sold your home in a short sale, so now what? Most people prefer to stay in the same community where they have lived for many years, where their kids have gone to school, and where they have established friendships. Your best bet is usually to lease or rent a home for a while, until you are prepared to buy again. This can be difficult however because of credit challenges that may have resulted from the short sale, missed mortgage payments, or from other financial difficulties. If my team assists you by selling your home in a short sale, we will also help you with your next move! We are leasing experts. We handle many more home leases per year than the average real estate agent in Orange County and we have the experience and know-how to work with landlords and credit issues so that you can find your next home!